Wednesday, 7 November 2012

Fed Report: 100% Chance of Recession

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Now that the election is over, the propaganda media can back off the
burying of those critical stories that they couldn’t be bothered to
report in the lead up to the re-election of President Obama.
What are we talking about?

For starters, the Federal Reserve’s recent report, which received
nary a comment from the political and financial pundits on television.

While the economy was on the minds of most voters last night, what
they didn’t know may have very well swung the election to one candidate
over another.

And this particular tidbit of data is as important as it gets when we’re talking about economic health:

“Recession probabilities for the United States are
obtained from a dynamic-factor markov-switching model applied to four
monthly coincident variables: non-farm payroll employment, the index of
industrial production, real personal income excluding transfer payments,
and real manufacturing and trade sales. “

What’s interesting about this index is the current reading. At 20%, the index is at a level that has ALWAYS been followed by a recession.
As you can see below, the index has never approached 20% without a
subsequent recession. All 6 recessions since 1967 have coincided with
20%+ readings in the US Recession Probabilities index.

It’s no secret that the economy is still hurting. According to this
report we are on the verge of another recession within the midst of a
broader ‘depression.’ Contrarian analysts have already suggested this is
the case, with many saying we’ve been in recession since at least
summer.

Look at the chart below. You see that red line? That’s the
government’s official GDP, a measure for economic growth. The government
shows it in positive territory and its been heralded without question
by the mainstream machine as the proof for an economic recovery.

Now look at the blue line. That’s the unofficial GDP as calculated by
economist John Williams using algorithms that account for distortions
in the way government calculates inflation.

A recession, as defined by most traditional measures of economics, is
a period of two consecutive quarters with negative economic growth.

That’s right — this whole time during which millions were losing jobs
and homes, and as food stamp usage doubled, we have been in
recession. That’s over four years now.

But did we really need a report from the Federal Reserve to confirm that for us?

On another (related) note, stock markets are down over 300 points as of this writing. Apparently Europe is in shambles (again).

It seems this is how financial markets around the world are
celebrating the re-election of a President who has presided over the
largest cumulative debt increase in the nation’s history.

Now that the election is over, we can return to our regularly scheduled programming.